Menu Close

Tag: 2019 News

School Bus Driver Convicted in Comp Fraud Case

A former Cabrillo Unified School District bus driver claimed he suffered a right eye injury from a co-worker blasting a high-pressure water hose at him. He said the injury left him with headaches and blurry vision in 2015. He said he couldn’t drive and received workers compensation from the district.

Rick Rossi’s claims were false, authorities say.

The 60-year-old was convicted of insurance and auto fraud in July and sentenced to 60 days in jail and three years’ probation.

He must also pay $60,000 in restitution to Cabrillo Unified, of which he has already paid about $56,000.

“This guy’s really quite the fraud,” District Attorney Stephen Wagstaffe said.

Keenan and Associates, a private insurance consulting and brokerage firm, referred the file to Regency Investigations for surveillance. That inquiry revealed Rossi was driving and hitting targets with a gun at long distances at a shooting range, Keenan officials said, indicating he was able to work. Investigators also say he pointed a gun at them and followed them, but no charges were ever filed as a result.

Cabrillo Unified officials declined to comment, but confirmed Rossi has not been an employee at the district “for several years.”

The investigation also discovered that Rossi filed an insurance claim, saying his parked car was hit. Google Earth images from five months before, however, show the damage already existed, according to the DA’s report.

Defense attorney Joshua Davis who represented Rossi said, “(Rossi) took responsibility and is thankful to put this matter behind him, especially for his family.”

Victorville Physician Convicted for Illegal Opioid Prescriptions

An ex-physician pleaded guilty to federal criminal charges for illegally prescribing and distributing the semi-synthetic opioid painkiller oxycodone to undercover operatives who visited the physician’s Victorville medical office.

Wendell Mark Street, 67, of Las Vegas, pleaded guilty to two felony counts of illegally prescribing oxycodone to patients without a legitimate medical purpose. United States District Judge George H. Wu has scheduled a December 9 sentencing hearing, at which time Street will face a statutory maximum sentence of 40 years in federal prison.

Street admitted in court that, while he was a licensed anesthesiologist, on August 1, 2013, he sold two prescriptions for $300 each to a confidential informant and Ray Ephraim, an undercover investigator with the California Medical Board. He further admitted that he wrote the prescriptions without a legitimate medical purpose and intentionally acted outside the usual course of professional practice, including by failing to conduct a physical examination, establish diagnostic testing, provide a treatment plan, and create documentation to establish a medication indication for the prescriptions.

The investigation showed that Street prescribed 7,769 prescriptions for narcotics, including 437,000 doses of oxycodone, from November 2012 to November 2013.

Street was charged in a 10-count indictment returned by a federal grand jury in February 2018. During the investigation into Street, investigators executed a search warrant at his Victorville office in 2014. Street surrendered his California medical license in 2016.

This matter was investigated by the Drug Enforcement Administration – Riverside District Office Diversion Group.

This case is being prosecuted by Assistant United States Attorneys Bryant Y. Yang of the International Narcotics, Money Laundering, and Racketeering Section and Jason C. Pang of the General Crimes Section.

Opioid Settlement Negotiations – $45B Demand and $10B Offer

McKesson Corp., Cardinal Health Inc., and AmerisourceBergen Corp. have proposed paying $10 billion to settle claims they helped to fuel the U.S. opioid epidemic – the first sign of progress in resolving state lawsuits against the drug distributors, according to people familiar with negotiations.

The companies, which deliver the majority of prescription medications to U.S. pharmacies, made the verbal proposal as part of talks with a group of state attorneys general, said three people familiar with the offer who asked that their names not be used because they weren’t authorized to speak publicly.

It’s the first time in two years of discussions that the three distributors put a dollar figure on the table to resolve lawsuits against them, the people said. The National Association of Attorneys General – handling talks on behalf of more than 35 states – countered with a demand for $45 billion to cover costs from the public-health crisis of opioid addiction and overdoses, the people said. Any settlement would be paid out over decades, they said.

Whether the distributors and attorneys general can agree to a deal remains uncertain. But reaching a compromise may not be the toughest hurdle. The distributors face almost 2,000 additional lawsuits brought by cities and counties across the United States, with a separate group of lawyers leading the litigation. Getting them to sign on to any deal could prove challenging.

Defendants in the opioid litigation have been unwilling to settle the claims against them in a piecemeal fashion. Also on Tuesday, the judge overseeing the federal multidistrict litigation, Dan A. Polster, heard arguments over a proposal to create a structure would allow defendants to negotiate with a single committee on behalf of all cities and counties in the entire country.

State attorneys general have vociferously opposed the plan. Polster seemed supportive of the proposal during the hearing, but said he would take the arguments under advisement.

Meanwhile, the first opioid trial, which severs as a test case, concluded in mid July. The trial took place over seven weeks in the college town of Norman Oklahoma. Instead of a jury, a state judge heard the case.. There has not yet been a decision by the Judge.

Initially, the Oklahoma lawsuit included Purdue Pharma, the maker of OxyContin. In March, Purdue Pharma settled with the state for $270 million. Just two days before the trial began, another defendant, Teva Pharmaceuticals, announced an $85 million settlement with the state.

In the closing argument, the Oklahoma attorney general asked the court to award $17.5 billion. If he is successful, the current global demand of $10 billion for all state cases will seem like a bargain.

WCIRB Proposes 5.7% Rate Reduction

The Workers’ Compensation Insurance Rating Bureau of California will propose a 5.7% average reduction in pure premium rates for workers compensation insurers in 2020, the agency announced Wednesday.

If adopted, this would be the ninth consecutive pure premium rate decrease since 2015, with reductions totaling approximately 44% since, the Oakland, California-based agency said in a statement.

Continued downward loss development, acceleration in claim settlements, sharply declining pharmaceutical costs and continued decline in the number of liens being filed are among the reasons for the reduction over 2019 rates, Dave Bellusci, WCIRB’s executive vice president and chief actuary, said in a presentation to the rating agency’s governing committee Wednesday, according to the statement.

Despite these the downward trends, Mr. Bellusci cautioned that loss adjustment expenses remain high and that medical and indemnity average claim severities are beginning to rise at levels closer to their historical norms, according to the statement.

The agency expects to submit its filing to the California Department of Insurance later this month, according to the statement.

NCCI Reports on Regulatory and Legislative Trends

In the first half of 2019, NCCI tracked approximately 668 state and federal workers compensation bills. A total of 415 bills were in states where NCCI provides ratemaking services. As of the end of June, 84 bills were enacted.

Legislation impacting first responders continued to be a hot topic this year with 122 related bills considered in 2019. The first responder bills address compensability for certain cancers and other diseases, as well as compensability for post-traumatic stress disorder (PTSD).

In 2019, at least 26 states considered legislation addressing workers compensation coverage for mental-only injuries, such as PTSD, for first responders. To date, eight states (Connecticut, Idaho, Louisiana, Nevada, New Hampshire, New Mexico, Oregon, and Texas) passed legislation addressing benefits for first responders with PTSD in 2019. In addition, Utah passed legislation establishing a working group to study the compensability of mental stress claims from first responders.

Other legislative trends include bills addressing medical cost containment measures, such as fee schedules and treatment guidelines; and court/legal issues such as arbitration and subrogation. These trends are very similar to 2018’s legislative trends.

There are now 11 states, plus the District of Columbia, that have legalized the recreational use of marijuana. In addition, the majority of states (33 plus DC) have legalized the medical use of marijuana, while another 14 states have legalized the use of CBD oil/nonpsychoactive forms of marijuana under certain circumstances. As of June 30, only three states (Idaho, Kansas, and Nebraska) do not have any laws legalizing marijuana in some form.

During the 2019 legislative session, several states considered legislation to authorize the reimbursement of medical marijuana in workers compensation. Those states include Hawaii, Kansas, Maine, Maryland, New Jersey, New York, and Vermont. As of June 30, none of the bills passed.

Rhode Island passed legislation that does not prohibit reimbursement but provides that employers and workers compensation carriers are not required to pay for medical marijuana. The Rhode Island legislation also states that an employer may not refuse to employ or otherwise penalize a person solely for their status as a medical marijuana cardholder, with certain exceptions.

Nevada enacted legislation that prohibits an employer from denying employment because a prospective employee tests positive for marijuana in a preemployment drug screening test. The new law contains exceptions for certain prospective employees, including firefighters and emergency medical technicians.

Utah passed legislation that, in part, allows certain insurers to issue workers compensation coverage to a cannabis production establishment or a medical cannabis pharmacy in the state.

In 2019, nine states considered legislation addressing prescription drugs in workers compensation. At least two states, Illinois and Nebraska, proposed adopting an evidence-based drug formulary. Other states considered legislation to restrict the use of opioids in workers compensation. Legislation proposed in New York would include medical marijuana as a “prescription drug” for workers compensation purposes.

DWC Proposes Increases to Med-Legal Fees

The Division of Workers’ Compensation (DWC) has posted proposed amendments to the Medical-Legal Fee Schedule to its online forum where members of the public may review and comment on the proposals.

The draft regulations include:

A single, flat fee for comprehensive ($1,650), follow-up ($1,100), and supplemental ($275) medical-legal evaluations
— Additional payment for review of medical records based upon the amount of pages reviewed
— Elimination of complexity factors
An increase in the hourly fee for medical-legal testimony
— An increased modifier for evaluations performed by a psychiatrist or psychologist
— An increased modifier for evaluations performed in an underserved area
— Standardization of the fee that can be charged for a missed appointment.

The implementation of a predominantly fixed fee for all procedure billing codes is anticipated to reduce frictional costs by establishing reimbursement that is based on objective and quantifiable criteria. The increase in the multiplier for setting fees will increase the reimbursement for the vast majority of evaluations performed by physicians.

The forum can be found on the DWC forums webpage under “current forums.” Comments will be accepted on the forum until 5 p.m. on Friday, August 23.

California Written Premiums to Drop by $1B

Expect workers’ compensation insurance rates in California to continue to fall, with total written premium expected to drop by $1 billion or more for 2019 despite the positive impacts of continued economic growth, a new report shows.

“We’re experiencing more than a $2 billion impact of lower rates,” said David Bellusci, executive vice president and chief actuary of the Workers’ Compensation Insurance Rating Bureau of California.

Bellusci on hosted a webinar – summarized in a report in the Insurance Journal – to give a rundown on the WCIRB’s just-released 2019 State of the System report.

Even with the falling written premium, the report portrays a healthy worker’s comp market in California that’s “very nonconcentrated,” with several hundred insurers participating, according to Bellusci.

Last year was the sixth consecutive year the industry has posted a combined loss and expense ratio below 100. The combined ratio was 90 in 2018. The ratio hit a high in 1999 of nearly 200 percent. “It’s been probably the most stable period we’ve seen,” Bellusci said. He expects the combined ratio to begin to go up, somewhat due to a modest rise in severity trends, but it will be largely due to declining rates. Bellusci said the ratio may get pushed into the mid- to higher-90s for 2019.

More than an additional $1 billion in payroll each year is being generated by economic growth. However, lower rates are reducing total written premium by more than $2 billion annually, according to Bellusci.

Written premium is expected to a total of $15.7 billion in 2019, down from $17 billion in 2018. Written premium has been on the decline since 2016 when it was $18.1 billion.

Reforms from SB 863 passed in 2012 have saved the workers’ comp system roughly $3 billion annually, with significant savings from lien cost, spinal surgeries and pharmaceutical costs, the report shows.

Despite recent rate decreases, California’s workers’ comp rates remain high compared with other states. Oregon does a state-by-state comparison every other year using Oregon’s industry mix as a control. The report last showed California’s workers’ comp rates at $2.87 per $100 of payroll compared with a nationwide average of $1.70. Bellusci attributed the state’s poor showing in that report to California’s high frequency of permanent disability claims, the long duration of medical payouts and high frictional costs.

Overall claim frequency in California has remained relatively flat, although the frequency of cumulative trauma claims continues to grow – particularly in the Los Angeles Basin and San Diego areas, the report shows. The L.A.-Long Beach area had a 32 percent higher frequency than the state average when controlled for industrial mix and wage levels, the report shows.

Officials Warn: “Fentanyl Crisis Raging in San Diego”

In the wake of four fentanyl overdose deaths in San Diego County in 24 hours last week, U.S. Attorney Robert Brewer issued a public safety alert for drug users to be aware that a lethal strain of fentanyl designed to look like oxycodone is being sold on the streets to unwitting buyers and the price may be the buyer’s life.

Brewer also warned that the fentanyl crisis is raging here as border seizures, prosecutions and overdoses are on pace to hit all-time highs in San Diego County at the end of 2019.

Fentanyl-related deaths are rapidly climbing to unprecedented levels. The Medical Examiner’s Office reports 50 confirmed fentanyl-related overdose deaths so far this year, plus another 28 suspected but yet-to-be confirmed cases with four months remaining in the year. Should this trend continue for the remainder of 2019, the death toll could potentially reach 130, which would amount to a 47 percent increase over last year’s total of 90 deaths, and a staggering 787 percent hike over five years ago when there were 15. The victims are overwhelmingly male, and the average age is 36, with the youngest 18 and the oldest 66.

Federal authorities, led by U.S. Customs and Border Protection and Homeland Security Investigations, have confiscated an estimated 533 kilograms – or 1,175 pounds – of illicit fentanyl at and near the international border so far this year. That’s more than half a ton. Just four years ago, authorities seized a fraction of that – only 30 kilograms.  In addition, there has been a record number of seizures involving counterfeit blue pills labeled M-30 that contain fentanyl.

The DEA is working in conjunction with local law enforcement agencies in San Diego to ensure the most effective overdose death investigations and prosecutions.  DEA is actively investigating fatal overdose deaths that occur in the San Diego County and has established an Overdose Response Group, which consists law enforcement from DEA, SDPD, Homeland Security Investigations, California Department of Health Care Services and FBI.  The goal of this specialized group is to identify the distributors of these deadly drugs that are bringing heartbreak to our communities.

Fentanyl is 30-50 times more powerful than heroin and so dangerous that in its purest form, even a tiny amount touching the skin can be deadly. According to law enforcement reports, the price of fentanyl in 2019 – whether in powder form and pill form – is declining, meaning that both forms are readily available in our community.

Users are also ordering up fentanyl from the so-called “Dark Web” like they would order something from Amazon. The drug is being purchased online and sent directly to customers by mail or express delivery service in the U.S.

In November, U.S. Attorney Brewer, DEA, HIDTA and the San Diego Prescription Drug Abuse Task Force are sponsoring a Western States Opioid Summit that will bring together hundreds of professionals from multiple disciplines to provide training and best practices to combat the fentanyl scourge.  Surgeon General Jerome Adams will address the group.

The U.S. Attorney’s Office and its partners created a local Fentanyl Working Group in early 2017, which meets quarterly.  This is a multi-dimensional group that includes local, state and federal investigative agencies, toxicologists, the Medical Examiner’s Office, DEA Lab Chemists, first responders, plus local, county and federal prosecutors. This collaboration is a significant step in working together to promote streamlined investigations.

Another SJDB Vendor Under Investigation

Earlier this year the Los Angeles District Attorney charged operators of,Technical School, Inc., doing business as Technical College, Inc., and Graduates Do Succeed Institute, doing business as GDS Institute with workers’ compensation fraud arising out of the use of SJDB vouchers.

Now, 23ABC News reports that a Bakersfield vocational training business is being investigated by the California Department of Insurance for alleged workers’ compensation fraud, according to court documents obtained by 23ABC News.

The court documents show the CDI is looking into the practices of Instituto Hispano Americano , located on Chester Avenue in Central Bakersfield.

A search warrant requested by the CDI shows multiple insurance companies contacted the department in 2018 over concerns of suspected fraud dating back to 2013.

One report, from Berkshire Hathaway Homestate Company, included as much as $248,600 in suspected fraud since 2013. The insurance company reached out to CDI in March of 2018 after suspicious arose about educational vouchers redeemed by Instituto Hispano Americano. BHHC told CDI they believed the services for the vouchers were not provided.

The education vouchers, according to the warrant, are from the California workers’ compensation system known as Supplemental Job Displacement Benefit. The vouchers are used to pay as much as $6,000 for educational and retraining or skill enhancement for workers who are injured on the job, suffering a permanent partial disability, according to the court documents.

Insurance Company of the West, in May of 2018, also reached out to CDI to report suspected fraud related to Instituto Hispano Americano. The insurance company told investigators the business allowed ineligible students to enroll in a training program without passing a required exam.

According to the documents, when ICW requested the students’ exam results, “[t]he results were on a non-descript [sic] letter, with basic typing and no letterhead. The score also appeared seemingly high at 118.” Results from four additional students were also forwarded showing “three out of the four claimants scored 118, and the fourth scored 123.”

Another insurance company, Zenith Insurance, also reported suspected fraudulent test results from Instituto Hispano Americano.

RAND Reports on Firefighter Musculoskeletal Disorders

The severity of recent wildfire seasons underscores the importance of a healthy firefighting workforce, and awareness of the psychiatric burden borne by public safety workers exposed to traumatic events has grown in recent years. Musculoskeletal disorders (MSDs) are the most common type of occupational injury or illness suffered by firefighters.

A 2010 RAND study on MSDs in California firefighters confirmed that firefighters experience MSDs at a significantly elevated rate compared to other workers, even compared to workers in other high-risk jobs. The California Commission on Health and Safety and Workers’ Compensation (CHSWC) commissioned RAND to update the analyses from the 2010 RAND study. and consider the impacts on outcomes for firefighters with MSDs.

According to the new 2019 Study, as expected, firefighters continue to face elevated risk of work-related musculoskeletal disorders, especially injuries to the lower extremities and trunk.

As in the 2010 study, firefighters with musculoskeletal disorders appear to have less severe economic consequences from their injuries than do workers in similar occupations. Post-injury earnings relative to in the second year after injury were sharply lower in comparable occupations: 88 percent for police, 85 percent for other public-sector workers, and 87 percent for private-sector workers.

This is an unusual pattern of post-injury outcomes, both because at-injury employment is nearly as high as overall employment and because it is much higher than observed in comparison occupations. Fire departments appear to do better than other employers – even public-sector employers – at retaining injured workers.

DEU ratings and statutory permanent disability benefits rose for firefighters after SB 863 implementation. Firefighters have relatively high occupational adjustments, and their slightly older age at injury may also results in more favorable adjustments under the current disability rating schedule.

Firefighters with musculoskeletal disorders rarely receive treatment or permanent disability benefits for PTSD or other psychiatric conditions. A troubling, caveat is that mental health stigma could lead to the patterns observed in these data. Stigma is widely recognized as a barrier to diagnosis and treatment of PTSD and mental disorders more generally among public-safety workers, but the scope of this study did not encompass measurement of firefighter mental health independently of care provided through workers’ compensation.

RAND did not find evidence that treatment caps on chiropractors, occupational therapy, and physical medicine had a substantial impact on most workers.